Mining operations will be suspended at Birchtree Oct. 1

The wave of bad news that has washed over several Northern Manitoba communities over the past couple of years reached Thompson shores May 16 when Vale's Manitoba Operations publicly announced what employees had been told the previous day: Birchtree Mine is scheduled to be placed on care and maintenance as of Oct. 1 because it is losing money at current nickel prices.

"As you know, the nickel market continues to be challenging as inventories remain high and the price remains at an historic low, with little sign of significant recovery in the near term," said a May 15 email to employees from Mark Scott, the head of the company's Manitoba Operations. "This reality has caused us to review every aspect of our business. As a result we have made the difficult decision to suspend operations at our Birchtree Mine and place it on care and maintenance in the fourth quarter of 2017. This decision was made after serious consideration of the alternatives and the realization that there is no production scenario available that would reliably generate positive cash flow from the Birchtree Mine in the short or medium term."

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"It is through no fault of the people at Birchtree that this difficult decision has been made," Scott continued. "There is simply no way to overcome the current combination of price, grade and the maturity of the workplaces from which we are attempting to reliably produce at Birchtree. Cash flow from the mine has been negative in five out of the last six quarters and the forecast is for that trend to continue and worsen. At the same time, the price of nickel continues to languish, falling by some $2,000 a tonne this year alone. The decision to suspend operations at Birchtree, though difficult, is the right one for the larger business and the long-term sustainability of our Manitoba Operations as a whole."

Vale said in a May 16 news release that there are about 150 employees working at Birchtree and that it is expected that up to 50 additional jobs in downstream processing, service and support functions will also be affected.

United Steelworkers Local 6166 represents 120 of those workers and USW Local 6166 president Les Ellsworth says the union is disappointed that the decision to suspend operations came from the company's Manitoba Operations and that they were notified only on Monday.

"The biggest disconcerting thing for us that we found out yesterday was that this was a Manitoba division decision not a corporate one," Ellsworth said May 16. "The Manitoba division went off to Toronto and made a presentation to shut down Birchtree and put it on maintenance and care because they felt that Birchtree was a sinking ship and they felt that they had no opportunities to bring it back at this time because of the nickel prices, the base site, the low grade ore. We believe they should be supporting the Manitoba division and allowing corporate to do that. We disagree with them going and making a presentation to shut it down, absolutely."

USW Local 6166 vice-president Gord Medwid said that unlike in 2012, when employees at the mine were given the opportunity to improve cash flow through the $100 million challenge, this time there was no advance opportunity to try to head off suspension of operations at Birchtree.

"Was there another opportunity to try and keep Birchtree afloat?" Medwid said. "I don't think we'll ever know that because we really weren't in any of the conversations with potential helping hands here with regards to the government."

Ellsworth says although the news was a surprise, the fact that Vale needed to do something about the mine was not.

"The way the mine was going, absolutely, we knew something was going to happen if they didn't correct it. We tried to get them to listen to us to change some of the management which they did at the lower end but not the top end and it was a bad news story all the way around. Our biggest issue is now we're faced with the possibility of layoffs and yet we're supposed to be a team. We're supposed to be partners with them and yet we were not given no opportunities to influence, whether with them or the governments."

The union says Vale should get rid of all its contractors – Ellsworth estimates there are 400 or 500 of them – before USW Local 6166 members get laid off.

"Our position is very clear that prior to any thought of any layoff whatsoever amongst our members the contractors should be replaced first," he said. "Our members live in Thompson, they have homes in Thompson, they pay taxes in Thompson and they should be the last people that should ever be laid off. Contractors normally take their bag of money and leave and that's the way it is."

Looking beyond this news and at the bigger picture, Ellsworth says he isn't satisfied with how the Progressive Conservative government is standing by while Northern Manitoba suffers.

"The government is sitting back, particularly the Conservative government, and doing absolutely nothing," he said. "They have not called us, they have not met us. We got an MLA who has not stepped foot in here and said, 'Let's sit down and have a discussion,' so that's a big issue for us as well."

Uncertainty about the future can also pose a risk to employees, Medwid says.

"For Birchtree in particular there's concerns about the day-to-day activities and how people will be reacting to this announcement," he said. "Our concerns obviously are for the health and well-being of our members out there and making sure that they're focused on doing things safely and concentrating on the work in front of them. The intention that we were told from Vale was that they were going to produce right through to the end of September, right until closure date, so that'll be their challenge from today forward is to do that regular routine kind of stuff where perhaps people are going to be really concerned and worried about their future prospects here, whether or not they're on a chopping block for a layoff, perhaps. That' s deeply concerning for us."

Ellsworth says the collective bargaining agreement that runs until September 2019 includes provisions to provide incentives for employees to take early retirement around the time that the refinery and smelter close down and he hopes those provisions can be extended to include workers affected by the Birchtree decision.

"We're certainly going to be pushing that that be moved up earlier because of what has happened at Birchtree and see if maybe some of the older folks will want to leave because there's an opportunity to leave that they hadn't seen coming yet for a few months," he said. "What we want to do is lessen the impact as much as we can for layoffs."

Scott said the decision to suspend mining at Birchtree doesn't mean Vale doesn't see a long-term future in Thompson.

“We are currently investing more than $80 million in our concentrate load-out facility, which is critical to our future as a mining and milling operation, while also completing a $40 million upgrade of our tailings management area to accommodate our life of mine plan production," he said. "While this announcement will present another challenge for our employees, our community and Northern Manitoba, we are resilient, our people are strong, and it is through the distinctive SafeProduction action of active, genuine care for one another that we will persevere.” 

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